Yahoo has appointed a new chief executive to help revive its fortunes.
Yahoo has reported a loss in the final three months of 2008 as the economic downturn hit sales of online ads.
Its figures showed a loss of $303.4m (£215m) compared with a profit of $205.7m a year earlier.
But analysts said the company had weathered the downturn better than expected, with the loss mainly due to one-off costs.
The results come as Carol Bartz takes over from Jerry Yang as the firm's new chief executive.
Mr Yang stepped down following his rejection of a $47.5bn takeover offer from Microsoft last year, which rankled the company's shareholders.
"The company made important investments while aggressively managing costs, leaving us better positioned to weather the economic downturn and emerge stronger when advertiser spending improves," said Ms Bartz.
However, she gave a cautious outlook for the beginning of 2009. The company said its first-quarter revenue will range from $1.53bn to $1.73bn, a decline from $1.82bn at the same time last year.
Revenue fell 1% to $1.806bn.
Analysts said the fourth-quarter results were not too big a setback for the firm as the loss stemmed from one-off charges to cover the cost of laying off 1,500 employees and to account for bad investments.
However, close rival Google saw revenue rise by 18% in the same period.
"To a certain extent, [the fourth quarter] was not as bad as some of the dire cases we were talking about," said Martin Pyykkonen, an analyst at Wunderlich Securities.
For 2008 as a whole, Yahoo made a net profit of $424m compared with $660m in 2007.
The company's shares rose in after-hours trading.